Will also send down mortgage rates

Britain’s vote to exit the European Union will likely have a long-term impact on the world economy – but in the short-term, U.S. real estate, including prime Brevard County property, could be flooded with investors flocking to the U.S. as a safe haven, pushing up the dollar and sending down mortgage rates. (Image for Space Coast Daily)

BREVARD COUNTY, FLORIDA – Britain’s vote to exit the European Union (EU) will likely have a long-term impact on the world economy – but in the short-term, U.S. real estate could be flooded with investors flocking to the U.S. as a safe haven, pushing up the dollar and sending down mortgage rates.

On the commercial side, global corporations could show additional interest in U.S. real estate as they come to see the U.K. as a less certain place to set up or maintain their businesses, Yun says, “especially in London as it becomes a less attractive place to conduct global business.”

While a rise in the dollar could hurt U.S. exports, it’s also expected to put downward pressure on long-term mortgage interest rates.

“Mortgage rates will tumble,” says Greg McBride, chief financial analyst at Bankrate.com, “possibly hitting new record lows. If you’re a borrower, don’t wait to lock in your rate, as this opportunity may not last long.”

However, Fannie Mae Chief Economist Doug Duncan says low rates could last for a while.

“Unfortunately one of my foreign sellers closed on a home in Melbourne today. Needless to say she was disappointed with the historic low exchange rate.”

In addition, foreign households who might have otherwise looked to London to buy might turn to U.S. residential real estate, although U.K. citizens, who historically are among the top buyers of investment and vacation homes in the U.S., could pull back.

“The British economy will be disrupted, and hence we should expect fewer Brits able to buy in the U.S.,” Yun says.

Steve Rick, chief economist at CUNA Mutual Group, was quoted in a Bankrate.com article saying a further drop in mortgage interest rates could give new life to home-mortgage refinancing, which started to cool early this year after several years of big growth.

“This would create another mini-refinance mortgage boom at financial institutions, as homeowners rush to lock in near-historic low interest rates,” he said.

In the long run, though, the uncertainty stemming from the vote could cause broad global weakening, which would hurt jobs, income and consumer confidence. That would be a net-negative for U.S. real estate, even if it sees gains in the short-term.